Skip to main content

Notifications

Announcements

No record found.

Microsoft Dynamics AX forum
Suggested answer

Inventory posting with foreign exchange creating discrepancies

Posted on by 5

Hi everyone,

I wasn't able to find anything that answers that point. Here is the situation.

We are a company operating in CA$. We often purchase items in US$. We update our currency exchange rate once a month in AX. We are using AX 2012.

Usually, the reception and invoice are posted in the same month with the same exchange rate. However, in some case, we receveid the items at the end of the month which will book the inventory translated in CA$ with a corresponding accrual. Then, the invoice from the supplier is posted only the following month with the updated exchange rate.

In the Inventory value reports, this difference in the exchange rate doesn't appear, since inventory is not reevaluate which is correct. However, it seems that the difference created by the exchange rate is booked directly into our inventory account at the GL level which is incorrect and create a discrepancy between our inventory report and the GL.

In summary, our vouchers starting with "IAP" (invoice matched with reception) are creating discrepancies between our inventory report and GL due to exchange rate.

We are pretty sure that it's a setting that is incorrect, but which one ? Any idea where to start looking ?

Thanks a lot for your help,

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Inventory posting with foreign exchange creating discrepancies

    Hi Katanya,

    You seem to use accounts in a kind of different way.

    Can you share more details of your setup and let us know how you use the invoice journal, and how you setup the purchase order related accounts in the inventory posting matrix.

    Many thanks and best regards,

    Ludwig

  • Katanya Profile Picture
    Katanya 5 on at
    RE: Inventory posting with foreign exchange creating discrepancies

    Hi Ludwig,

    Original reception is dated November 17, 2020 which is the rate used by the system to clear up the "Received not invoiced" in the Invoice journal entry.  However, since the rate is not the same on November 30, the invoice is booked with a different rate in the same journal entry.

    "Received not invoice" is our accrued purchases account, not an inventory account.

    At the end of the transaction, our "Received not invoice" is NIL. We have no discrepancy there.

    We realize that while going through our inventory value report, since we have a discrepancy with our GL account. There is other issues, but one of the issue is that IAP transactions are not showing a net amount of 0  in GL and they are not considered in the Inventory value report.

    I will try a reevaluation on the Received not invoiced account. However, in our case, this account is net to 0 at the end of the month already, since the journal entry posted for the invoice used the same rate as the reception. Do you think it may force the system to use the same rate as the invoice since the account will be reevaluated ?

    Will keep you posted with the results !

    Thanks a lot for your help, it is much appreciated

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Inventory posting with foreign exchange creating discrepancies

    Hi Katanya,

    Got your point.

    I have a question and a note/comment.

    Question:

    How did you manage posting transactions with different exchanges on a single day (30 Nov)?

    Product receipt and invoice were posted on that day with different exchange rates.

    How did you realize that?

    Note/comment:

    The main issue seems the received not invoiced account which is a temporary account that should always have a balance of $0 once the invoice is created.

    Because of the exchange rate change entered a difference remains.

    Can you please carefully test in a demo/test environment running a foreign currency revaluation on the received not invoiced account in GL to see if this results in a posting on a foreign exchange profit/loss account?

    Best regards,

    Ludwig

  • Katanya Profile Picture
    Katanya 5 on at
    RE: Inventory posting with foreign exchange creating discrepancies

    Hi Ludwig,

    Our USD transactions looks like that when we booked the invoice. The first part agree with the received amount both in USD & CAD. However, since the exchange rate is not the same, CAD amount for the account payable is not the same as the received amount. Not sure if it's clear ?

    pastedimage1608581368403v1.png

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Inventory posting with foreign exchange creating discrepancies
    [quote user="Katanya"]However, it seems that the difference created by the exchange rate is booked directly into our inventory account at the GL level which is incorrect and create a discrepancy between our inventory report and the GL.[/quote]

    Can you provide some additional information / screenprints on this statement?

    How is the exchange rate difference booked into your inventory account?

    Many thanks and best regards, 

    Ludwig

Helpful resources

Quick Links

Replay now available! Dynamics 365 Community Call (CRM Edition)

Catch up on the first D365 Community Call held on 7/10

Community Spotlight of the Month

Kudos to Saurav Dhyani!

Congratulations to the June Top 10 community leaders!

These stars go above and beyond . . .

Leaderboard

#1
André Arnaud de Calavon Profile Picture

André Arnaud de Cal... 288,420 Super User

#2
Martin Dráb Profile Picture

Martin Dráb 225,672 Super User

#3
nmaenpaa Profile Picture

nmaenpaa 101,148

Leaderboard

Featured topics

Product updates

Dynamics 365 release plans